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China’s financial distress turns all too visible

First published: Financial Times, 19/03/2014

Country’s economic change will have deflationary consequences

Investors have a lot to worry about without cause to fret about China, but now they have that too. Trend growth is slowing down, and markets have been shaken up by the actions of the People’s Bank of China (PBoC), which is trying to tame a virulent credit boom.

The incidence of financial distress is rising and becoming more visible. The recent drop in the renminbi, and the sharp fall in copper and iron ore prices are the latest high-profile manifestations of China’s changing outlook. These are not random developments or bad luck, but connected parts of a complex economic transformation with deflationary consequences for the world economy and skittish financial markets….“more:”